tv Bloomberg Daybreak Americas Bloomberg December 3, 2019 7:00am-9:00am EST
deal. president trump says there is no urgency, passing doubt that there is a phase i around the corner. president trump delivers harsh criticism of nato, and strikes back at france, saying if anyone taxes u.s. tech companies, it should be the u.s., not france. in markets face weaker u.s. economic data and more trade risk from china, europe, and latin america. welcome to "bloomberg daybreak" on this tuesday, december 30. i'm alix steel. president trump speaking at the nato summit in moving markets. sb futures down by 0.2%, throwing some doubt on a phase one trade agreement. some buying finally coming into the bond market after yesterday's complete carnage, with yields really jumping and crude flat on the day, taking all of this in stride. time for the global exchange,
where we bring you today's market moving news from around the world, from hong kong to london, madrid, paris, and washington. we want to start with the latest trade development. president trump signals he would be willing to wait for another year before striking a trade agreement with china. pres. trump: in some ways, i like the idea of waiting until after the election for the china deal, but they want to make a deal now. we will see whether or not the deal is going to be right. it's got to be right. alix: joining me from hong kong is enda curran. this is very different from what we heard yesterday from president trump. value, it is clearly the strongest signal we have had yet from the white house that we may not have this trade agreement by the end of the year. i think it will probably, something of a shock to both the chinese and global investors who have pretty much been banking on
some kind of agreement by the year-end. but remember, we still have this deadline of december 15 for when these tariffs are threatened to be increased. that batch will impact all kinds of consumer goods in the heart of the u.s. economy. try and,s will want to at the very least, avert those duties if they don't get a deal. andtions between the u.s. china are clearly tense over non-trade issues as well, especially human rights in hong kong. it paints a picture that the outlook --ing that there is a deteriorating outlook. on face value, it is a pretty negative remark from president trump, but we have to wait and see how things pan out over
coming days and ahead of that december 15 deadline. alix: thank you very much. we want to go now to madrid, where almost 200 countries are gathered for the world's largest climate conference. joining us for more from madrid is our bloomberg reporter laura malan. what have we heard so far? ura: we have heard a report that is probably going to set the tone for the talks that started yesterday and are going to go on for the next two weeks. the wmo presented that report that said this year marks the end of the hottest decade on record, and also the hottest five years on record. changes in the environment is resulting in climate disasters, extreme weather events across all of the world.
typhoon, drought, forest fires we have been seeing this year. alix: thank you very much. now we go to paris, where president trump is striking back francece come up -- planning to raise tariffs on american tech. pres. trump: if anyone is going to tax american companies, it is going to be us. it's not going to be france. alix: that was sort of the nicer thing he wound up saying about france. very harsh words for president emmanuel macron as well. forrter: very harsh words president emmanuel macron. it is the announcement of these potential tariffs in france that have already sparked pretty furious reaction. the french say there is no legal basis for them. they say this is not the kind of thing that should be happening between allies. they also say that of runs got to work together for some kind
of global solution, and they were hoping the u.s. administration would be on board with that. alix: so what do they do from here? they had to have expected some kind of retaliation. reporter: what the french say now is that they will drop their u.s.ational tax, which the is imposing tariffs on, because if the u.s. comes to the table and negotiates a solution with many other countries at the oecd level, so they have an agreement on how to tax digital companies, at that point france will drop it national tax and this whole thing will go away. alix: think you very much. now we had to london, where nato leaders are meeting today. the transatlantic alliance is holding a 70th anniversary meeting amid doubts.
on the phone from london is just insane, bloomberg new -- newsstin singh, bloomberg white house correspondent. what did you hear from president trump about nato and the agenda? justin: it was interesting to see president trump be a real rolever's -- reversal. this time he painted himself as a defender of the alliance, in -- to macron.cron it's been an interesting turn for the president. we will see how that plays out, especially as the two meet later this afternoon. they will be talking about trade and the future of nato. we also know the u.s. wants to bring up 5g and china. getting europe to come together 5g technologyei's
eufavor of u.s. and solutions. alix: finally, we end in washington, where a gop report concludes the investigation into president trump failed to establish any impeachable offenses. "where there are ambiguous facts, democrat interpret them in a light most unfavorable to the president. disregard any wrongdoing with respect to presence on the board or ukrainian influence in the 2016 election." republicans on capitol hill releasing that 110 page report, pushing back against the
house intelligence committee, chaired by democrat adam schiff. that said, behind closed doors, members of the committee have been meeting to review that impeachment inquiry report. while makers on the house intelligence committee at six clock p.m. new york time will vote to adopt that report, and then send the up each meant inquiry -- that impeachment inquiry to the house judiciary committee, chaired by democrat jerry nadler of new york. this comes at a time when the judiciary committee has invited the president and the president's attorneys to participate in a hearing set for wednesday, but the white house declining that opportunity to participate. new reports out today that havelican allies to this pushed back against the impeachment altogether. alix: thank you so much. another story that anyone who lives on the east coast is watching is that winter storm that hit last night. . may travel completely miserable for much of the u.s.
it hit the east coast, and by the time it is over, we may get anywhere from 10 inches to two feet of snow from pennsylvania to maine. all of this heavy snow is expected as far south as north carolina and even tennessee. new york state has called members of the national guard in to help with snow removal. almost 800 flights were canceled yesterday, and 65th hundred delay -- and 6500 delayed. at prices for the midwestern hub, you can see that spike at the end of the chart as you see prices around $33 per megawatt hour, a little bit of a rise as you had the storm come. no doubt a precursor to the winter as it kicks up. coming up, much more on your morning trade and analysis on the markets in today's first take. this is bloomberg. ♪
alix: time now for bloomberg first take. joining me from our in-house team of wall street veterans is -- is damianer o is also, and with me david lebovitz, j.p. morgan global market strategist. today we get three different headlines about more tariff issues with the u.s. and latin america, china, europe, you name it. what are you looking at? damian: yesterday's move is nothing to shake a stick at. countries have been defending their currencies, so the fact that the u.s. and china tariff them for allowing their currencies to depreciate doesn't make much sense.
, basicallyoing after saying be december 15 deadline is still in play, the markets are not priced for that, in my opinion. that's what i see equities coming off, the vix rallying. the mx currencies are off -- the emx currencies are off. a lot of key levels getting taken out here. alix: the overall theme is that we will get some kind of trade deal. yesterday president trump said it is all up to china, today says it is all on me. sameer?ou look at this, guest: i think we will see more volatility and probably get one of those pullbacks. i think we are in an environment characterized by background noise. trade isn't going away.
the bond market, if we to get out where we were at the end of the summer, has been reading a very different version of the story. i think what investors need to focus on today is the fact that there is a u.s. presidential election next year. the administration understands they need the economy to continue to grow in order to get reelected. so it is going to be about using the limited resources. we've been talking about bumping into supply-side restraints. you've finally seen that beginning to happen. how much further can the consumer go without generating material wage growth? i think the administration is going to be very careful and how they play their cards with suspected these geopolitical issues. understand, what i december equities are off to their worst start since the global financial crisis. sit, is it really going to be -- i mean, how quickly does the u.s. election really come into play?
are we talking q1? when does that takeover markets in the meant? i know j.p. morgan -- take over market sentiment? i know j.p. morgan talked about business sentiment being the big driver. at the end of the first quarter next year, we should have a good election -- a good direction. sameer: it seems like the progressive wing is starting to lose some support on the democratic side. seen a little more strength on the biden front come on the mayor pete front. that is probably what the market is taking some part in. that even if there is a democratic candidate, a democratic president, you could have a little less discontinuity than you would under a progressive president. alix: but before all that, we have to get through december 15. do you need to take risk off the table based on all these headlines? you have the president coming out and saying france, i want to
tax our companies, not you. that was quite a statement. david: i don't think you take risk off the table. i just think you need to be thoughtful in how you implement risk asset trade. one of the things we've been talking about for the better part of the last 12 months is this limited approach of quality and yield. if you focus on quality, the cash flow is going to be there and should drive returns in the stock market. if you focus on yield, we would talk about dividends plus buybacks. that could mute interim volatility, give you a tailwind from an earnings perspective, and make the right a little more comfortable. it is naive to think at the end of an expansion, you are not going to see volatility pickup. but if you are a multi-asset investor, you take risk off the table, where do you put that money? returns from the fixed income market remain essentially zero. that is not a viable option. damian: especially heading into year end. but if you just look at dollar-yuan, people got very
complacent coming into this month. it was barely budging, and just like that we are back to 7.06. certainly, one of the ways a lot of investors are positioning is probably not -- you know come out of the money, one by one or two by two calls on either side just to protect against a move either way would make sense. i am not saying we are getting , butense of reconciliation i think you have to protect against that centrally happening because it's just been such a whippy one. sameer: it is not a compelling opportunity, fixed income. the yields are low, but when you look at risk off moves, one of the few ports in the storm is still long-duration fixed income. we have been inching further out the curve. where, onceably this cycle ends, where you want to be. david: i think it is a viable way of playing defense, just
like putting options on your portfolio. if you have a security with a duration of nine, and the 10 year goes to one, you are looking at a total return of 10, which is a pretty nice offset. alix: did you see it is a short-term thing, in terms of volatility? i know you guys were talking long-term strategy. damian: i think it depends. if you look at march, fixed income currencies all basically spike. it is these key points in time that are really driving how people want to technically position their portfolios going into the new year. i think you just have to be mindful of some of the overhang, some of the risk and excesses out there. i see, certainly in e.m. credit, i see curves flattening because the berlin list duration is structural more than cyclical, and that is not going away
anytime soon. sovereigns look relatively cheap, and that might be one way to play that. 1.95%: the 10 year was at just a month ago, so tactical opportunities do present themselves. unfortunately, everyone is waiting for the fast pitch. be worried that all of you are agreeing? [laughter] sameer: the broader part of the market clearly is agrees with us -- clearly disagrees with us. the market is only down 0.2%. david: i think the other thing is we look at this stuff every civil day, so perhaps we have come calloused or develop the ability to look through this near-term vol. but i think the investment community is saying things look ok today. we recognize there is a big gap between realized and implied in general.
the data is going to have to come through, but if the data starts to wobble, then you see p -- you see vol tick up. alix: you had china pmi's, european pmi's, and then you get the manufacturing ism, and that was a totally different look. on a fundamental basis, what do you guys see? stabilization, growth, or bad news to come? damian: most of the street this year is calling for stabilization in gdp growth. is unusual to see everyone in consensus, not just the three of us. but it is also about the earning cycle. earnings come of the cycle turning and maybe bottoming in international stocks, and certainly in e.m.
equities. we were almost seeing it into this month with the high-yield etf's and some of those other things going on in the markets. david: i don't really expect the trajectory of growth to change anytime soon, but beneath the surface, we are seeing some movement. the rest of the world is coming back online at a time when the u.s. consumer is running out of steam. it is really how those internals affect the outlook for earnings and things like that. i am not too bent out of shape by the ism print yesterday because the u.s. isn't a manufacturing economy. improvement out of europe and china are far more important. i've got my eye on non -manufacturing tomorrow. sameer: the tricky part is, global recoveries, i can't help but remember 2017.
you just had that really tight band forecast. it is going to surprise you. we would probably say volatility surprises a little bit to the downside here. alix: really great conversation, you guys. thanks very much. damian sassower, always great to have you. david lebovitz of jp morgan and sameer some on will be sticking with me. na will beeer sama sticking with me. check out the charts and more, go to gtv under terminal. gtv . this is bloomberg. ♪
growth in an area of negative interest rates. avenue costs are expected to be little changed through 2023. the government of kuwait will invest up to $1 billion in the aramco ipo. the kuwait investment authority was reluctant to commit significant funds to the aramco deal, but it was told by the government a stake was in kuwait's strategic interests. record forting a cyber monday, up 17% from a year ago. it boosted an already robust holiday shopping season. bad weather across the continental u.s. may have helped. it gave consumers plenty of reason to shop from their own home. that is your bloomberg business flash. alix: thanks so much. just want to point out to my husband, i did not buy anything yesterday. protesters here in new york had their own way to markets. about three dozen of them
gathered outside the penthouse under by amazon ceo jeff bezos in manhattan as part of a globally coordinated attention to draw attention to amazon practices. among the complaints, warehouse worker injuries, environmental of technd the amount data they gather on their customers. bull onp, the biggest the street reins in some optimism. a wide dispersion of what we can actually expect, what the binary trading may be, and how to protect against it. this is bloomberg. ♪
really taking in stride all the negative news from latin america versus u.s., china versus u.s., europe versus u.s. even the dax is up 0.5%. an asset classes, a very similar story. you're getting modest buying within the bond market, but we are only 21 basis points in the spread, and the vix is 16. if you need to price out any kind of trade deal, that is definitely surprising to me. all of this begs the question as to your 2020 outlook. you have assets across the board divided on where stocks could in the year. at deutsche bank, a top stock both for the year -- stock bull for the year is keeping his target up for 2020. he writes, "the u.s. presidential election should make it difficult for the fundamental uncertainty emanating from u.s. trade policy
to dissipate completely. break in theor a -- for a break in the downward trajectory of growth and some bounce, not a rebound to the peaks of this cycle as the market is pricing. " samana still is sameer of wells fargo and david lebovitz of jp morgan. david: summer of last year was no fun. the starting point this year was phenomenal. it is really a function of where everything began. to your point beneath the surface, you look at what is gone with earnings this year, you look at the outlook for , we are more year low single digits, but a lot of that depends on what happens with stock margins. rising andts start
we feel this uncertainty about trade for the foreseeable future, that will be an even more challenging environment for earnings. we are really trying to focus on the fundamentals and say, what is the underlying data telling us? can we ignore this background noise? trade is going to keep tickling the market for the next 12 months, like it or not. what are earnings doing? what is the trajectory of growth? what is the outlook? do you continue to own risk assets or move into a more defensive stance? alix: let's get to some of your top calls. sameer, what do you like? how do you protect while taking on the appropriate amount of risk? sameer: one is the great ways is to upgrade the quality of your portfolio. we would underweight small caps and high yields. we would take that money and put it into large-cap u.s. equities, and probably play technology, consumer discretionary, and
financials. alix: you also like global reads, you mentioned in your notes, and mlps. is that only dividend play? sameer: as the cycle matures, we think income will become a greater part. david: i share that sentiment. i am glad to meet somebody else who think financials can do well. in addition to that kind of income theme, not only are we trying to play that for the public markets, we are trying to play that through the private markets as well. it is really about balancing cyclicality and yield, looking at things like unlisted infrastructure, other parts of the private market, and not taking on too much business cycle risk. prepared.o be i think that is something where, at this juncture, it might work in investor favor. if you locked money up, you're not trying to pull it out at what could essentially be an
opportune time. alix: here's where we are in the bond forecast, here's where we are trading right now. do we get to 1.2%? you both want to buy the long and for some exposure. do we get that low? sameer: we do think the drift lower in yields continues. alix: it is not a recession and total panic? sameer: we don't think so. just a lot of the factors that have been in place continued to stick around. low inflation, week both. k- low inflation, wea growth. alix: you look at this continued and thatce provides further ammunition for rates to continue moving lower. we were talking about everybody waiting for 2%, wanting to pull
the trigger and go duration. if everybody is waiting for rates to hit a certain level, it is very unlikely they will hit that level. look at projections for inflation, look at projections for growth, look at a fair assessment for value and player tips. does how much money that imply is sitting on the sideline? do you have a read on that? david: it is tough. . there is still a lot of money on the sidelines. you are beginning to see money flow back into equities. when it comes to fixed income, i think the marginal buyer at this point are large institutional investors. they look at the world, they see this uncertainty, they say, i need to figure out how to pay my liabilities in perpetuity. sameer: you have fed funds sitting at 1.5% to 1.75%. for the fed to go to do percent, you've got to think there's another downshifting global growth -- to go to 2%, you've
got to think there's another downshift in global growth. sameer and david, hang tight. flareup in thehe market has been the repo and plumbing. that could create some trimmers across the global banking system, and december may see the same kind of thing that struck the market 12 months ago. dani burger joins us with more. reporter: it's really been the topic of conversation when i talk to strategists about december. a repo flare out and squeeze seems to be their top concern. a repo is essentially a short-term learn. income,a little bit of and the other side gets to borrow cash cheaply. seeing some issues with this in a quarter and/or year end is nothing new -- quarter end or is nothing new.
we've seen banks increasingly pulled back at the year end, especially in europe. we see different regulation that encourages banks to downsize near the end of the year because their surcharges are taken from a snapshot around this time, around the end of december. this is important because repose are basically relocation for the financial market. we tend to see these during the season, but they seem to have gotten more violent. sll of this suggests bank are starting to pull back from the role as market facilitators. we saw this when the fed had to step in and provide short-term liquidity, something it hasn't done in a decade. one strategist i spoke to says he is near positive that this could happen again in december, and if it is violent enough, especially during this period of illiquidity, we could see a broker default. that would cause the people on
the other side having to sell the collateral they are holding, and that could easily cause a fire sale. alix: really appreciate that set up. thank you so much. how do you guys look at the repo market? sameer: anything that tightens financial conditions, i am looking at libor starting to creep up, and that is before the year-end scramble for dollars. anything that tightens financial conditions is probably something that should be viewed as at least equity market negative. david: i think we are all in agreement that liquidity tends to dwindle into year-end. we essentially have a little bit of a preview of what could potential he happen with what occurred at the beginning of september. the one thing that's been very clear across the fed's most recent statements is they stand willing, ready and able to act. they understand that perhaps they rein down the balance sheet to quickly, and that that created a cash grab in september, along with a couple of other idiosyncratic events that all occurred at the same time. i think if they begin to pick up
on the sense of stress in overnight repo markets, i think they are going to shoot their shot. i don't think they are going to hesitate. alix: this is where i run into problems. the fed is going to come in and fix it, it is going to be fine. the other conversation is that there has to be long-running applications for that. whether or not it is qe, you are going to expand your balance sheet. there's also repercussions in terms of where the treasury is going to wind up issuing on the curve. are those legitimate threads to make, or is it truly plumbing, they fix it, bye-bye? david: given the stance of regulation at the current junctures, this is just fixing the plumbing. part of the reason we saw that cash grab is because banks are holding excess was herbs as tier one capital to meet their requirements. if that wasn't the case, they would let go of their liquidity. this is the world we are in. i think that requires an inherently higher fed balance sheet. i don't think long-term asset purchases are off the table next
time around, but i totally agree they are going to be starting from a higher level. sameer: i think the take away from markets has been you can call it whatever you want, but if you are expending the balance sheet, we are going to look at it is good for risk assets. you can't tick away the fact that it started with issues with financial tightness. alix: really great. really enjoyed the conversation. fargo investment institute and david lebovitz of people morgan asset-management. viviana hurtado is here with first word news. in london, president trump telling reporters he has no deadline for a potential agreement with china. he suggested it could be better to wait until after next year's election. the president also defending his plan to raise tariffs on french goods. the u.s. may slap tariffs on $2.4 billion of french wine, cheese, handbags, and other products to retaliate for a french tax on digital revenues.
that tax hitting large american tax companies such as google, facebook, and amazon. a veiled threat to the u.s. from north korea. kim jong-un's retheme saying it gifts"aring "christmas for president trump, the latest effort to pressure nuclear talks. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm the vienna hurtado. this is bloomberg. alix: coming up, unicredit is now the latest to announce it is getting rid of jobs. more on today's wall street beat, next. if you have a bloomberg terminal, check out tv . watch us online, interact with us directly. if you miss anything on our
viviana: you're watching "bloomberg daybreak." california, investigators say pg&e could have prevented the state's deadliest fire. the bankrupt utility failed to properly inspect and maintain its transmission system. a pg&e wire is blamed for starting the fire that killed 85 people, destroyed tens of thousands of homes and businesses, and ultimately led the company to declare bankruptcy. shares of french luxury goods makers are lower. president trump threatening to impose tariffs on french wine,
handbags, and cosmetics in response to a french digital tax that hits large american tech companies. debut ins making its the junk bonds market. the social networking website is marketing $600 million high-yield bonds. in recent years, junk-bond investors have proved willing to lend fast-growing tech companies. alix: thanks so much. we turn now to wall street beat. we cover three things wall street is buzzing about this morning. first up, citadel snags another top goldman trader. the blank ship fund at ray dalio's bridgewater associates fails to impress. of changeing a chunk
to investors any for your plan that includes cutting about 8000 jobs. joining me is bloomberg's sonali basak. who is moving from goldman to citadel? sonali: it is a top equity derivatives trader at goldman sachs. these days, it is not that he is joining the cohead of goldman. alix: what does this tell you? does it say more about goldman or set it out? -- or citadel? sonali: a little of both. a lot of traders are leaving goldman. a lot of partners are leaving goldman. see some exits come about for citadel, to be sure, a lot of pain this year. they have partnered after
partner after partner, and at some point you reach a ceiling. sonali: that is the thing. at morel trading is than 19% for the year. a good year for the co-cio. a lot of change, new faces. alix: let's go to ray dalio. ridge water associates not doing as well -- bridgewater associates not doing as well, in particular, the china call. sonali: to be clear, it is only about $30 billion under management, but this does come after a tough year for the awful fund. august, a 6% through little less than that when you bring it further into the year. something i want to point out, earlier this year, our reporter who covers hedge funds mentioned san joaquin county, a small pension fund in northern california, also pulled their money in goodyear. last year, this fund was up more than 15%. alix: let's get to the third
story, which is unicredit. they are going to do more share buybacks, return more money to shareholders, also cutting jobs. there's a whopping amount of jobs that have been cut by european banks this year. sonali: more than 70,000 job cuts announced this year alone, 80% of them in europe, and not just retail banking. a lot of it is retail banking out of this announcement, but hsbc, socgen, citigroup are also investment banking jobs being cut. alix: i also wonder, part of what you might want to do before m&a is get leaner, and then you are more approachable, or you are able to go by something -- to go buy something. sonali: that's what they said at unicredit. alix: i have to wonder, is it done? all of the job cuts in general? and how many more levers to they have to pull when they still have negative rates? sonali: i don't think the job
cuts are done, and i think more are coming out of u.s. banks as well. you've heard citigroup also announce some job cuts in trading come but i think there are more to come. alix: sonali basak, thank you very much. another development that caught my eye today, tourists apparently don't seem to care about the months of violent protests in hong kong. it is likely to hold onto its status as the world's most popular city for international visitors, according to euromonitor international. it is followed by bangkok, macau , singapore, and london. ranksile, delhi joins the in eighth place. up on this program, we are going to look at the potential top performers among equities in 2020. that is in today's trader's take. if you are heading into your car, tune into bloomberg radio on sirius xm channel 119 and on
alix: time now for trader's take. sassower, is damian .loomberg intelligence damian: we are looking at equities, dollar credit, currency rates, and em currencies. no one knows where the dollar is headed next. i am not going to tell you where it is headed next. aroundget is something 2% writ large, but if you look at em equities, we are looking for 8% to 12% returns, but with a lot more volatility then fixed income. clearly, sharpe ratios are very low. we don't expect that to change. but we look at companies with high operating leverage, we see a rebound in equities, and that should help countries
like china, brazil, mexico. i think one way to play it is investing in domestic u.s. equities that have exposure to emerging markets, but we are talking about pure local currency emerging-market equities. that has more to do with the fact that it is going to be kind of a rebound in china, tencent go those because so so manys, so go others. rate cuts across all emerging markets have taken place this year. gains are not going to be as persistent in the year ahead. it is going to be a little more challenging, something on the order of 47% returns for em local rates. finally, em dollar credit. dollar-denominated debt, we are going to have treasury yield,
future -- treasury yield, if you just look at ira jersey, he's calling for treasury yields something like 2.5%. that's going to weigh on returns. we think they could widen from here, so let's call it flat. 47% returns in em dollar credit. alix: i feel like we are hearing a lot of that from asset classes. lowered expectations. damian sassower of bloomberg intelligence, think you so much. citig up, catherine mann, global chief economist, will be joining us. her take on where we are headed in terms of a trade war and how the economy models along with returns. this is bloomberg. ♪ everyone uses their phone differently.
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december 3. i'm alix steel. let's take it from the top. pres. trump: in some ways, i like the idea of waiting until after the election for the china deal. but they want to make a deal now. we will see whether or not the deal is going to be right. it's got to be right. alix: president trump says there is no urgency for trade war truce, casting doubts for a trade war deal around the corner and china gets ready to publish in unreliable entities list. enda: relations clearly are tense over nontrade issues as well, especially human rights, so it fits the picture that there is a deteriorating outlook between both governments. war snags europe as france imposes a digital tax on u.s. companies. pres. trump: i don't want france taxing american companies. if they are going to be taxed,
it's going to be the united states who taxes them. alix: the u.s. hits back with tariffs on $2.4 billion of imports, while france's finance minister said the eu would retaliate, and it is not the behavior we expect from the u.s. against one of its main allies. almost 200 countries gather in madrid for the world's biggest climate conference, organized by the u.n. >> we have to reach progress on key items, mainly achieving success on article six and boosting preparation for new and revised national climate action plans through next year. the conference happens just as the eu is getting ready to launch an ambitious push against climate change in a radical overhaul of its economy. and in the markets, you're looking at trade question marks resonating within the u.s. equity market, but it is
somewhat calm. equity futures down by about 0.5 percent, but maybe it could be worse. the currency market also pretty calm. yields down by just four basis points, not even reversing the move higher we saw yesterday. 0.1%.also down by about joining me on set, catherine mann, citi global chief economist, and emily roland, john hancock investment management co. chief investment strategist. thanks a lot for being here. catherine, i commend this morning, i would ask that to be s&p futures down 1.5%. how do you view it? catherine: first, nobody really expected the deal to be much of a deal to begin with. having it pushed off is perhaps just getting rid of some uncertainty. the second thing is, when we look into 2020, is there going to be as much of an escalation of trade tensions as we saw in 2019? certainly not. in fact, not having a deal be
done through 2020 takes some uncertainty off the table, nothing good thing. alix: you look at what we've learned in the last 12 hours is not bad? like, trade is not great, but we knew that? it is not any worse, and maybe we have stabilization? catherine: it is not going to be worse next year as it was this year, so the headwinds are not as bad next year as this year. we will stop hearing tweets about china, and that would be a good thing. emily: i'm not sure i totally agree with that. you have seen futures under pressure this morning, and volatility picking up a little bit. everything has been so quiet lately. we haven't heard a lot of headlines around trade, and investors are potentially recognizing how badly they can get whipsawed by making asset allocation and investment decisions based on these tweets. there's the idea that we are waiting for more news, and maybe
investors aren't quite as reactionary, but there's also been a lot of positive sentiment around trade priced into the markets. the s&p 500 is now up more than 27% year to date, and a lot of that is based not only on the federal reserve providing a lot of liquidity in the market, but also positive sentiment on trade. so a lot has been priced in. catherine: i think it probably wasn't appropriately priced in either, by the way. fed rateexpecting a cut next year is probably pricing that in inappropriately, and anyone expecting a trade deal is pricing that inappropriately. is there the possibility that you are kind of saying the same thing, just looking through different lenses? that if we get some uncertainty pared off, you're looking at 1.5%, 2% growth, which is ok? you've got to be
a little bit more realistic about what 2020 looks like now that we've got these extraordinary returns. if you think about it, a 6040 balance portfolio -- a 60-40 balance portfolio just gave us the best returns since 1998. invest news need to stick talk of that -- investors need to .ake stock of that we've got 10% earnings growth expected in 2020. a lot more things need to go right on the macro front, and then we've got a federal reserve that has given us everything we want this year, not only cutting rates three times, but also expanding the balance sheet quietly by about $300 billion over the last three months. that is a huge liquidity band-aid that has kind of made everything else that's gone wrong ok. on the balance sheet, i think jay powell made clear it
is not qe. alix: does that matter, really? catherine: it does because qe is indicative of there being difficulties with the level of credit and financial conditions, and open market operations is merely maintaining the policy rate path that the federal reserve has said they want to do. so the two really do have different end locations for how the market perceives the state of the economy. alix: but does that mean when they do wind up doing qe at some point, you start from a bigger anyway? does that not have them locations for where the treasuries can issue on the curve, where you might have other plumbing issues? is there a knock on effect later? catherine: in the size of the balance sheet, they said they were always trying to figure out what the appropriate size was 10 years after you have currency and all sorts of other things affecting the balance sheet. we are still finding what the appropriate size of the balance sheet is. qe about which place on the curve, you've got tremendous amount of supply of treasuries
coming into the market, so what will challenge qe is how the fed reacts to the ongoing sale of treasuries coming in. i think that is the most interesting question, and we could get into a yield curve control strategy. emily: our main concern is, do investors realize the balance sheet is no longer growing? that has been such a important tailwind for risk assets this year. we are still positive we have a balanced outlook for 2020. we want to stay invested. we don't want to fight the fed, but does that liquidity hose cut off at some point and leave investors wanting more, where the fed is not ready to give them more? that is the big concern we have headed into 2020. catherine: if you look at the market excavation for fed reaction, it is not neutral. it expects an additional cut or more, and there is going to be turbulence when the fed doesn't deliver that. the real question is, does the fed respond to the turbulence?
let's say we had a 15% monthly correction. words that take us to? it takes us to the middle of the summer. that's not exactly tight financial conditions. alix: that leads me also to a great article on the bloomberg talking about the shift from qe into fiscal stimulus. put global stimulus bond yields on the break of a shift in the start of a new era of growth. it will exert upward pressure on yields." is it actually fiscal stimulus that we are then talking about in six to seven months versus another cut from the fed? catherine: there's already been fiscal stimulus twice, including the last budget. that's already in the pipeline. so the fed disappointing, it's not a disappointment.
it's the fed ensuring financial stability, which doesn't mean financial stable markets. priceds appropriate late assets. that is where the real issue comes in. are the markets currently pricing inappropriately credit risk, inflation risk, and so forth? i think the answer is clearly no. emily: we agree that the amount of fiscal stimulus won't be as much as the tax cuts we saw a year and a half or so ago. the idea is if we do get a recovery in terms of economic growth, which i think is the base case, today it is probably a little more shallow than what we have seen in previous recoveries. there's this idea that pmi's are bottoming, and the leading economic indicators are bottoming, and economic growth is going to be accelerate. we are open to that idea, but we don't see a re-acceleration where risk assets or high beta parts of the market take off. that if the reason we are investors that if
participate in the upside, but also look for ways to prune risk and lower the beta of an overall folio. alix: where do you need to reflect this shift of what we are going to see in 2020? emily: from an asset allocation standpoint, one of the things we have noted is there's tons of money going into cash. $400 billion has gone into money market funds just through october. that is the biggest level ever ex-2008. we suggest that they actually lean into the intermediate part of the curve, embrace core bonds, and get that cash off the sidelines in order to participate. factor,g the quality companies that have high roe,
low earnings stability, that is our way to participate in this market, but do so in a very disciplined way. catherine: the other thing you want to do is go someplace else. if somebody is going to talk about fiscal, the possibility is that there is a lot more fiscal in emerging markets. your preview -- your previous guests were talking about emerging markets being an attractive asset class. i dare agree with that. we have to perform a little bit better, and they will outperform expectations. even though there is a lot of andes, idiosyncratic issues so forth, there's definitely the possibility that they will coalesce around the climate issue. we won't call it fiscal spending. we'll call it climate change financing. alix: i love that you just took it there because it is our next segment. it is almost like you know. we'll come back and talk more
alix: ecb president christine lagarde making her debut appearance in the row yesterday before european parliament, telling them members of the european bank would be resolute. garde: the policy stance has been a key driver during the domestic recovery, and that stance will remain in place. monetary policy will continue to support the economy and respond to future risks in line with our price stability mandate. alix: still with me, catherine
mann of citi and emily roland of john hancock investment management. if we get the central bank things out of the way, anything we see in christine lagarde's tenure? low rates forever? catherine: i think the real issue is whether she can motivate the fiscal side of the equation. that is what was teed up by mario draghi. maybe now the ball is ready to be kicked. her background as a finance minister in her work in the g20 on the finance ministers side really sets her up to be able to talk to those people and see how to bemplementarity has done between monetary and fiscal. is really interesting, some of the bigger days in terms of market reaction have been on days where there is some
discussion about fiscal stimulus happening in europe or germany. you see this big back up in yields and this big risk appetite developed across global markets, and really, that is the next place where you could see some kind of tailwind or some kind of catalyst to finally see these lethargic economies turning around. you talked about the potential for these economic surprises to develop, and i feel like we've been waiting for that for a long time. if you look at the pmi data in europe, everyone is cheering because germany is now 44.1, and you are seeing france above 50, but most of these major non-us developed economies are still below 50 in terms of the pmi data. that is the low inflation environment that won't change unless we see fiscal stimulus. catherine: i am going to have to push back on your using the pmi data as an aggregate. the distinction between the services and manufacturing pmi is really dramatic.
that is true in the united states in spades. it is true in europe, it is true in japan. the manufacturing pmi as a bellwether for the state of the economy i don't think is representative of where we are. we are not in a normal business cycle, where maybe the manufacturing pmi is a bellwether. labor markets are incredibly tight, supporting services. it is the only way you can deal with a labor market that if this type. so the manufacturing pmi more than average is not a good bellwether. emily: i agree with you, services is important, especially in the u.s. when you think about the consumer driven nature of our economy, but usually the manufacturing pmi is the first thing to go, and the consumer is the last thing to fall. our job, as difficult as it is, is to look for things that lead, and the manufacturing pmi tends to be that element. catherine: that's right, but
this is not a normal business cycle. this is a case where we have tremendous tension from headwinds on the trade side and tailwinds on the labor market side. one of the other things that is a factor producing value of the manufacturing pmi as a bellwether is that increasingly, farms are using information technology and services, and that is not a manufacturing pmi. ,n the u.s., that kind of capex the intangible capex, is countercyclical. you could see regular capex and the ip type of capex rising. that is what you do when you want to increase the flux ability of your firm and deal with labor market from -- the flexibility of your firm and deal with labor market shortages. that is why i say there is extreme pessimism on europe, because there is a focus on germany's auto industry. that is being viewed as the bellwether for all of europe, or
the indicator for all of europe, and i think at is missing the point. alix: so what is good about europe? and if it is good, why do we need fiscal? catherine: well, it is not as good as it should be. what is good is the strongest labor market in germany since the 1980's, and the strongest leader market in europe since they started collecting european wide data. that is a good thing. that is very positive for europe. is it good enough? no, because the monetary authority is still sitting on negative rates, which are increasingly having negative impacts. savers saving more, so forth and so on with the banks. you need a balanced policy mix. andy: i would just jump in say that things are not getting worse in europe. i think there is a distinction between getting better and not getting worse. our base case is still for the slow growth, low-inflation environment, and from our view,
what that really means is embracing things like global utilities or global infrastructure, which is kind of thinking about investing in the things that people need and not necessarily what they want. taking that more defensive posture in europe, while we are a little bit more risk on in the u.s., is the best way to play that market at this point in time. alix: let's take it forward to the fiscal stimulus conversation. we have 54 billion euros of climate investment from germany. is that enough to get the fiscal stimulus you are talking about that would make you get more bullish on european equities? catherine: there's german fiscal stimulus, and again, i think it is best to call it climate transition finance. emily: doesn't it feel like an oxymoron, german fiscal stimulus? theerine: you change
terminology around this because the political point of view. is good strategy for a politician, especially if it has good economic outcomes. but then you have other countries that have space because they are paying less in that service. that is a direct -- in debt service. that is a direct reaction to the ecb. so what do you do with it? do you provide r&d? do you provide spending? all of the countries in europe have some opportunities there. alix: is that mmt? catherine: no, that is using the space you get from lower interest rates. alix: so at some point, the ecb is not just going to directly finance this in some capacity? catherine: in some sense, the
monetary authority is always the one who finances things. alix: but not directly in that way. does that make you more bullish on europe if we get something along those lines? emily: if we saw a massive fiscal stimulus package, but again, it is not our base case. it would be very unusual for areas like germany to come off of the pursestrings, but certainly, fiscal stimulus be beneficial for the euro, beneficial in terms of getting us away from the negative rates overseas, and all of that would be quite healthy, but it remains to be seen, and we wouldn't be making investment decisions based on the today. alix: thanks a lot. and emilymann of citi roland of john hancock investment management will be sticking with me. this is bloomberg. ♪
citi says netflix is facing heightened competition. netflix hasin july, fallen almost 19%. still, on the year it is almost 20%. unicredit will make job cuts and reward investors with buybacks. unicredit is struggling with growth in an area of negative interest rates. recordn shoppers set a for cyber monday. they spent $9.2 billion online. from a year ago, that is up 7% -- up 17%. bad weather across the u.s. may have helped. it gave consumers plenty of reason to shop from their own home. that is your bloomberg business flash. alix: thanks so much. i am taking a look at one merger in the commodity industry today. steel is a steelmaker.
so you have a iron in steelmaking. expandll about trying to the output. all told, steel prices are still down by about 1/3 in the past year, trying to show some signs of recovery. the latest is president trump putting import tariffs on steel and aluminum imports from brazil , as well as argentina. coming up on this program, why lower rates may not be as enticing -- may not be enticing more homebuyers. we will talk to sanjiv das, caliber home loans ceo. this is bloomberg. ♪ here, it all starts with a simple...
that was easy! glad i could help. at xfinity, we're here to make life simple. easy. awesome. so come ask, shop, discover at your local xfinity store today. alix: this is "bloomberg daybreak." i am alix steel. lots of trading headlines circulating her last few hours. you can read it as it could be worse or we are seeing trade pessimism being priced out --
optimism being priced out, i should say. s&p futures near the lows of the session. in other asset classes, it is relatively stable g10 market. a weaker dollar story overall. the vix still somewhat elevated because we are at 16 basis points. you are seeing some commodities start rollover as well. we do have some breaking news. , the co-chief executive of bridgewater will leave the firm. this is the next chapter in ray dalio's succession plan. her counterpart, david mccormick , will now become the sole ceo. the hedgeray leaving fund and david mccormick will become the sole ceo at bridgewater. much more on that later on in the show. lower rates in the u.s. not yet
having an effect on the housing market. bloomberg's michael mckee is looking into some of the numbers. michael: the fed came into the year saying it was going to be on hold and then lowered rates because the economy slowed, saying we can have an effect and it looks like they have, at least in the mortgage market. mortgage rates have fallen to multiyear lows and we have seen at the same time home sales rise. those mortgage rates have bottomed out and we do see a flattening of home sales. the question is does the mortgage market continue to support additional home sales. one problem you have with all of this is whether or not houses are affordable. after the great crisis we saw prices drop. now they have come back up that home prices, even though they are down are still rising faster than wages. it is still an affordability issue for many americans, particularly at the lower end
and particularly at key cities in the united states. san francisco is the poster child for unaffordable homes. the white line is the -- the price index for homes nationwide. that is san francisco in blue. people cannot afford housing. if you are at the lower levels, you are priced out. yellow, new york, still below the national average. if you want to house you can afford, go to cleveland. it is relatively affordable. the problem is all of the jobs seem to be on the coast. alix: i did not really want to go to cleveland, but thanks for that. on the housing market, sanjiv das joins us now. still with me as catherine mann of citigroup and emily roland. the second start michael was talking about, that is something you help with. sanjiv: that is true. affordability has been an issue.
the way we help on affordability is we allow people to borrow more than what they normally would in traditional debt to income ratios. we find the performance of that has been pretty good. mike's point around affordability being an issue in general across the country is absolutely correct. i would like to highlight that in certain cities affordability is still very good and we are seeing this migration where people are moving to cities like -- maybe not cleveland, but definitely tennessee, charlotte, and jobs created around those places, like technology. there is an interesting urban migration phenomenon because of jobs, affordability, and taxes. alix: in terms of the fed lowering rate, what kind of impact you notice on that versus wages stuck in no man's land? sanjiv: i would like to separate the uncertainty questions.
the impact of the fed lowering its rates has been phenomenal in terms of people refinancing their mortgage. a thousand down dollars per month. i am sure we will see results in black friday christmas shopping. the consumer balance sheet has become strong and consumer disposable income has improved because of lower rates. people have also get consolidated their loans into mortgages. the rates have gone down. on the purchase side, if you remember when i was here a few months ago, i was concerned about the homebuyer not getting into the market because of affordability issues. we are starting to see that needle move. october, november, december, my loan officers are telling me that purchases are picking up strong, particulate and some of these markets that are outside of the coastal areas. alix: what do you think, catherine? catherine: the issue is the
entry-level buyer. can they pull together a down payment? if you're younger, pulling together a down payment is extremely difficult, especially on the coast, but even in the interior, where the prices are lower. the other issue is on the supply side. the costs of construction have increased dramatically. tariffs on aluminum have made it more difficult. costly.on wood are more labor costs have gone up. your ability to build the houses for the entry-level buyer has also been affected, made more costly. you have a couple of different headwinds making it more difficult for the entry-level buyer to get into the market. sanjiv: that is absolutely spot on. the first homebuyer and if you were to separate this into demand and supply, supply is the issue that is causing rises to go up, particularly in the northeast. the weather is not helping in the northeast, as you noticed.
standpoint, what is causing a lot of interference is the huge amount of student debt. that is putting the burden on first homebuyer's. alix: let's say all that stays. what are the broader ramifications of people renting, not necessarily buying homes? what is repercussion and 30 years? emily: a couple of things. the multi family home has been more robust in terms of construction. that is one way people get into a place where they can build wealth. if you have a generation that is not in a position to build wealth through housing, it has been an important strategy for building wealth. if you do not have that, what does that mean for the next generation? if you're an asset manager, you do not have an asset pool to manage. you may be managing the transfer of assets from the older generation to the younger generation, but that is a smaller group. you have wealth creation as well
as wealth management. sanjiv: i agree with catherine, although i would say after the huge financial downturn this , peopleon remembers think about housing differently in terms of wealth creation. in thise mobility cohort of first homebuyer's, i probably bell higher indexed on renting over buying. -- there are issues of zoning in california that make it more difficult for multi families. we will see a lot of urban migration over the next five to 10 years. alix: howdy wrap this into a cohesive investment thesis quote -- how do you wrap this into a cohesive investment thesis? emily: there is evidence we are seeing a mildly acceleration in the u.s. economy. you look at things like building
sales, existing home sales, prices, we are starting to see that data come back. it has been weak for a big part of this recovery. if we continue to see strength, that provides evidence the move the fed has made our filtering into the system. not ready to call the all clear that we will see a major re-acceleration in economic growth, but it does provide that evidence we are seeing a recovery. alix: do you feel like the refinance rate cycle is over or is there more to go if the fed cuts or if rates stay low? sanjiv: i think of rates went up another 25 basis points, i think the refinance cycle will dry up in the last five months. but i have been proven up. every time i thought rates would go up, rates would go down. points,nt down 25 basis about 56% of homebuyers refinance their mortgage only in the last six to 24 months that
are likely to refinance again. that is a staggeringly large number. that is a real world impact. , we were talking about the transfer of wealth. if we do not get a buildup in housing wealth, where does it come from? can we get it somewhere else? can we get it from mobility, or you lose that wealth altogether? catherine: one of the most concerning aspects of income evolution over cohorts, in other words people born in different time periods is normally you enter the labor market and your income grows over time and you save and you become -- you egg, whetherst t you do it in stocks and bonds are your housing. but the last couple of generations do not see that pattern of rising real income over their lifetime.
they are in middle-age. they are 35 to 50 and their incomes have stagnated. this is the group that ought to be accumulating stuff and ought to be increasing wealth. they are not. they are not because their income growth has been stymied by two financial crisis, and slow wage growth over that time period. there is an entire generation of people who do not have the same pattern of lifetime income to create wealth from. alix: ok. 35 is middle-aged? 35 is middle-aged? that is all i have to say about that. alix: sanjiv das and emily roland, thank you. catherine mann will be sticking with me.
viviana hurtado is here with first word news. viviana: president trump casting doubt on the chances of a trade deal with china anytime soon. tellingn, the president reporters he has no deadline for a potential agreement. he tells reporters it to be better to wait until after next year's election. he also defends his plan to raise tariffs on french goods. the u.s. may slap tariffs on $2.4 billion of french wine, handbags, and other products. that tax hitting large american tech companies such as google, apple, facebook, and amazon. letident trump vows to not people take advantage of u.s. companies. a change at the top of the world largest fund as eileen murray is leaving at the end of march. her counterpart, david mark mccormick -- david mccormick will become the sole ceo. ray dalio gave up management of bridgewater in 2011.
five people have held the title of ceo or co-ceo. i'm viviana hurtado. this is bloomberg. more on those leadership changes, bloombergs and ali bostic joins me nap -- birds sonali bostic joins me now. li: a note -- she says she is -- her name was wei du did -- her name was floated for the wells fargo position. she is a senior woman on wall street. she has run technology operations at morgan stanley and also at credit suisse. alix: do we clean anything about wall street women in the hedge fund world or is this they maxed out, they want to go somewhere else, or is this a generation of women wanting to start different kinds of businesses?
of the moreis one senior women on wall street, but at bridgewater five people have helped the ceo or co-ceo position throughout the succession planning ray dalio has done. ray dalio is past 70 and david mccormick is 54. he has held the post for the last two and a half years with eileen. ray dalio once a team to be running bridgewater and not just one person. who else will be elevated and any changes pending next will be interesting. alix: any news around where she might go or what you might do? sonali: she has a wide gamut. she does not need to stay in finance although one would hope she will. alix: thank you very much. coming up, banking commitment to fighting climate change. headl be speaking with the of energy natural resources and --ewables on bmps effort
alix: almost 200 countries gathering in madrid for the world's largest climate conference. is conference just as the eu getting ready to launch an ambitious push against climate change and an overhaul of its economy. french business giants bnp is getting among those ready to confront climate change. "as we have announced, we are committed to working with and supporting those energy sector partners who have decided to make environmental issues a central part of their business policy." joining me is the woman behind making all of that happened, ravina advani.
catherine mann of citi is still with us. part of that is no longer lending to companies that are fracking. how do you help companies manage that transition while also say no to other forms of energy? ravina: bnp prides itself on sustainability endeavors. in 2011it call assets and put forward an announcement where we are no longer financing companies that have coal inherent to their energy mix post 2030 for the eu and post-20/40 for the rest of the world. we are also supporting companies with their renewable initiatives. we have invested north of 15 billion euros in the renewable space and we re-upped our targets in the space we are we billion --deploy $18 18 billion euros by 2021. we did recently undergoing energy transition which does preclude us from financing certain companies that have
fracking inherent to them, that have oil sands inherent to them. we are looking to support the companies that are the forefront of energy transition, particularly the u.s. utilities that are changing their own energy mix. technology ort of companies have the best viable solutions. what are trends you want to be lending to? ravina: offshore wind is a huge growth area in new england. there are nearly 20 gigawatts of development underway. many of the oil and gas companies we do support are looking to invest in some of those endeavors. we are looking at some of the newer evolving technologies. there is a lot of talk about battery storage. there is a lot of emphasis around hydrogen outside its industrial applications. we are looking at some of those evolving technologies as they make their way to the u.s. where they evolve. alix: catherine, we were talking
earlier about climate stimulus but not stimulus out of germany. does this is where it comes from? does it come from government? where will be the biggest bang for our buck? catherine: the energy transition has to be private -- has to be financed by the private sector. there is not enough government money to make the change happen. it is financing innovation, it is financing new companies, it is financing existing companies. the financial sector has an important role to play. that said, the government does set the rules for the game. it does set cap and trade or a a strategy for creating an environment where the relative prices facing buyers and innovators and sellers are such that the preference is to use the low fossil fuel mix. we will spend a tremendous amount of money on energy over the next 20 to 40 years.
it is a matter of changing the preferences about what you are going to buy, sell, or innovate. that is about relative prices and about where the government comply or roll. on your level, do you feel like you miss out on opportunities like building a pipeline from the permian to the u.s. gulf coast in the short term because you had restrictions on fracking? ravina: we are absolutely looking to support the clients we can bank and the sectors we can bank. we are already seeing that phenomenon play out. there were 13 gigawatts of coal retired in 2013 and 22 gigawatts of renewable investment opportunities that came online in 2018. we are looking at financing some of those renewable initiatives while also financing national play anations that incredible part in the energy transition.
natural gas is a critical energy source as we look to a carbon neutral environment. natural gas is also essential to deal with some of the intermittent issues related to renewable resources. alix: ladies, love the conversation. i do so much. ravina advani and catherine mann , great to have you. we will continue our climate series tomorrow. i will be speaking with the conocophillips ceo. if you're jumping in your car, tune into bloomberg radio, sirius xm channel 119 on the bloomberg business app. this is bloomberg. ♪
we broke the uptrend we talked about yesterday from the october lows. , we aresupport level down, more significant support around 3084. that is a retracement of the whole move, blow that 3074, and below that 3050. alix: you are selling stocks, are you buying gold? bill: gold has a bid. gold futures are up around 11 right now. still in a downtrend. it is basically as the curve downtrend of the 50 day and the channel downtrend since the september peak supports 1450, but the primary trend is below 1500. alix: thanks a much to bill maloney. that does it for me here. this is bloomberg. ♪
jonathan: coming up, nato leaders descending on london. trade issues trump security concerns. the president backing away from a quick deal. it might be better to wait until after 2020. france threatening to retaliate against the u.s. after the u.s. retaliates against france. 30 minutes until the opening bell. here is your tuesday morning price action. equities down. s&p 500 futures down .8%. in the bond market, there is your bid. tolds down five basis points 1.77. euro-dollar going nowhere. 1.1073. let's begin with the big issue. comeback hitting argentina and brazil with steel levees and responding to france's digital tax with a threat to slap tariffs on french goods. france then threaten